THERE is growing pressure on the government to ditch the
collapsing Zim dollar and reinstate the multi-currency system, anchored by
either the United States dollar or the South African rand, to stem the
country’s looming economic implosion, the Daily News reports.
This comes as prices of basic consumer goods and services
in the country continue to skyrocket — recording new highs by the day — largely
in response to the mad foreign exchange rates obtaining on the rampant parallel
market.
It also comes as a
pressured President Emmerson Mnangagwa
has instructed under-fire Finance minister Mthuli
Ncube and central bank governor John Mangudya to jointly
address the nation on the steps they are taking to mitigate the worsening
economic rot.
Besides the long standing economic crisis — which dates
back to the ruinous era of the late former president Robert Mugabe — Zimbabwe
is also fighting the double whammy of the global coronavirus pandemic and the
regional drought, which has left millions of people in the country facing
starvation.
A large cross section of Zimbabweans who spoke to the Daily
News yesterday warned that the galloping inflation and runaway prices of basic
goods portend an imminent total collapse of the economy, unless authorities
re-introduced the multi-currency system.
The secretary general of the Zimbabwe Congress of Trade
Unions (ZCTU), Japhet Moyo, said the ongoing plunge of the Zim dollar — which
was prematurely brought back by Ncube last year — against major currencies,
meant that even workers were no longer able to fend for their families.
“Our resolution in the last Tripartite Negotiating Forum
(TNF) as labour was for employers to start paying their employees using the US
dollar with effect from 30 June 2020.
“This is because the Zim dollar has lost value and is not
making any sense for workers who are confronted by soaring prices of basic
commodities and services on a daily basis.
“The only way forward is to adopt the US dollar or the rand
given South Africa is our major trading partner,” Moyo told the Daily News.
Former Finance minister in the stability-inducing
government of national unity (GNU), Tendai Biti, said bringing back the US
dollar would stabilise prices and tame the current hyperinflation, now
officially nearing a staggering 800 percent.
“The conditions for re-introducing the local currency were
never there, and what we are seeing is the market showing the government that
Statutory Instrument 142 of 2019 was a total failure and disaster.
“The only way we can get out of this disaster is by
re-dollarising the economy. Re-dollarising will assist to resolve the country’s
major challenge, which is low production,” he said.
The tough-talking Harare East MP also savaged the
government for its profligacy, which he said was fuelling the country’s
worsening economic rot.
“The problem we are facing in Zimbabwe is not just about
the currency, but also a government which spends more than it has.
“This is the major reason why the bearer cheque lost value
and the multi-currency system failed. Now, the Zimbabwe dollar has also failed.
“The government spends more than it has and this results in
the printing of more money to support fiscal spending, which in turn results in
inflation,” Biti said.
Despite showing early signs of efforts to turn around the
economy, which had suffered from years of corruption and mismanagement under
the disastrous rule of Mugabe, Mnangagwa and his lieutenants are now finding
the going tough.
Long-suffering ordinary Zimbabweans have been hit the
hardest by the Zim dollar plunge, which has triggered steep price increases of
basic consumer goods.
In addition, the country is once again experiencing acute
fuel shortages despite the commodity being in abundant supply worldwide.
Economists told the Daily News yesterday that time was
running out for the government to stabilise the economy. “The US dollar worked for us in 2009 and helped turn around
the economy, which had literally collapsed.
“Right now we are in a similar situation, if not worse,
where the local currency is losing value, prices of basic commodities are
soaring beyond the reach of many and the exchange rate on the parallel market
is running amok.
“So, adopting the US dollar is the only option we have
because this will ensure that there is price stability.“It will end inflation and … enhance production,” renowned
academic and economist, Tony Hawkins, told the Daily News.
He also warned that authorities needed to bring an end to
rights abuses and abductions of critics to attract international goodwill, like
what happened during the GNU era.
“In 2009, when the country adopted the US dollar, there was
political cohesion in the form of the government of national unity, and there
was a bit of international support.
“That was key in the stabilisation of the economy. However,
right now we have no political unity.
“We are witnessing abductions and human rights violations
which are further alienating the country from the international community and
painting a bad picture of the country to foreign investors.
“So a stable political environment is a key factor in
achieving economic stability,” Hawkins pointed out. Another veteran
economist, John Robertson, said introducing the US dollar now would be a good
step — which needed to be complemented by improved local production.
“Zimbabwe has become a net importer of almost every
product, some of which we used to produce on our own.
“Adopting the US dollar alone will not solve the problem.
We need to increase production, attract foreign currency through investment and
build reserves of our own which we can use during difficult times.
“The US dollar is not just adopted as a currency, it is
earned, and the only way we can earn it is if we increase production and start
exporting and also attract direct foreign investment,” Robertson said.
In 2009, Zimbabwe
binned its then worthless dollar and introduced a multiple currency system
which was anchored by the US dollar.
Despite this system having served the country well for more
than a decade, Ncube rattled the markets when he ill-advisedly ended the local
use of the US dollar and other currencies in June last year.
He directed that the Zim dollar be the sole legal tender in
the country without addressing the root causes of its crash and subsequent
decimation by hyperinflation in the run-up to the consummation of the 2009 GNU.
Daily News
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